Offer In Compromise Evaluation Process

What happens if an Offer In Compromise is submitted using the wrong forms?

The Offer In Compromise forms and "Collection Information Statements" (433-A and 433-B) are necessary to conduct an Offer In Compromise investigation. You will also need to submit an application fee and a 20% nonrefundable deposit (on the offered amount) with your forms.

Failure to submit these documents will cause considerable delay in the process.

Taxpayers wanting to pursue the Offer In Compromise as a way to satisfy their tax liability will have to submit the forms in order to have the Offer In Compromise reconsidered.

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Will the submission of an inaccurate Offer In Compromise affect the timely disposition of my case?

Yes. The IRS' procedures require that a taxpayer be contacted in writing and provided a one-time opportunity to correct the error(s), and/or update the financial statement.

Failure to correct the error(s) and/or respond results in the Offer In Compromise being returned to the taxpayer without any further actions on the part of the IRS.

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What happens if I miscalculate my Offer In Compromise or do not offer an amount equal to my reasonable collection potential?

This will result in processing delays and could be grounds for the IRS ultimate decision to reject an Offer In Compromise.

The IRS is observing a large upsurge of receipts in which the offered amount is clearly much lower than the reasonable collection potential illustrated on the taxpayer's financial statement.

In a significant number of cases, the taxpayer's financial statements show that the taxpayer has a clear ability to satisfy the liability in full, or via an installment agreement during the course of the collection statute, and the taxpayer cites no special circumstances.

The IRS reviews Offer In Compromise for fraudulent intent.

Submitting an Offer In Compromise with false information, or making a false statement to an IRS employee, is considered an indicator of fraud and may subject the taxpayer to civil or criminal penalties.

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What are the National and Local Standards and how are they considered in evaluating an Offer In Compromise?

Collection Financial Standards are used to help determine a taxpayer's ability to pay a delinquent tax liability.

Allowances for food, clothing and other items, known as the National Standards, apply nationwide, except for Alaska and Hawaii , which have their own tables.

Taxpayers are allowed the total National Standards amount for their family size and income level, without having to supply supporting documentation.

Maximum allowances for housing and utilities and transportation, known as the Local Standards, vary by location.

Unlike the National Standards, the taxpayer is allowed the lesser of the amount actually spent or the standard.

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